The robustness of low-carbon policies during China’s electricity reform
Nan Gu and
Energy Economics, 2022, vol. 111, issue C
The progress in decarbonization that China has made coincides with its market liberalization process. However, whether the implemented and planned low-carbon policies designed before the reform will lose their effectiveness after the reform has not been analyzed. In this research, we introduce a new dimension of policy assessment into the discussion about low-carbon policies, namely, policy robustness during an economic transition. Here, robustness is used to assess whether a low-carbon policy can maintain its functions and effectiveness during a market reform. We develop a framework and the associated metrics for policy robustness analysis. We apply our framework to analyze China’s fuel efficiency improvement project (FEIP) and compare the FEIP with the pricing-carbon policy (PCP) in two provinces, Guangdong and Fujian. The analysis shows that both the FEIP and PCP will lose some of their effectiveness during the market reform. However, implementing the PCP is more robust than implementing the FEIP because the PCP is able to promote the fuel efficiency improvement of cost-competitive coal-fired generators, whose market share will expand after the reform. The FEIP is particularly nonrobust in Fujian because of the distribution of the coal heat rates of Fujian’s power plants. We further conclude that overinvestment in generation capacity leads to less robustness of both the FEIP and PCP during the reform. There has already been overinvestment in China’s power generation capacity, but the current fuel efficiency policies can be seriously nonrobust and cause significant efficiency losses during electricity reform.
Keywords: Policy robustness; Electricity market reform; Pricing carbon policy; Fuel efficiency improvement project (search for similar items in EconPapers)
JEL-codes: L94 Q48 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:111:y:2022:i:c:s0140988322002067
Access Statistics for this article
Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant
More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().